Public Policy

Testimony in Favor of MFN Trade Status For the People's Republic of China

Delivered to the House Ways and Means Committee
June 17, 1998

Testimony before Congress By

Father Robert A. Sirico
President
The Acton Institute for the Study of Religion and Liberty
Grands Rapids, Michigan

Mr. Chairman, ladies and gentlemen of the Committee, I am Fr. Robert Sirico, and I represent the Acton Institute for the Study of Religion and Liberty, a non-profit research organization that promotes international contact between scholars, students, and civic organizations in pursuit of a classically liberal worldview of peace, prosperity, enterprise, and religious freedom.

At the outset, let me say that my fundamental concern on the issue of trade with China, especially in saying some things today before Congress that will upset some of my usual friends and allies, is how to better the human rights situation in China, with particular regard to the growing religious community there. I take trade as a means to this end.

Some people think that denying MFN to China would constitute a much-needed rebuke to the Chinese regime, and compel the government to change its policies regarding minority religions. I agree that the political rulers of China are in need of a moral rebuke, but one that is effective and is itself moral. As a Catholic priest (although not speaking for the Bishops' Conference) who has visited with members of the underground Catholic and Protestant churches, I feel a strong spiritual bond to the members of the clergy who have been jailed for speaking out against government policies, or even for merely preaching the gospel. I too would like to see these practices end, and I believe we all have a moral responsibility to speak out whenever and wherever religious freedom is hindered, especially when it involves acts of violence and repression against individuals and groups.

What I do not understand is how cutting China off from membership in the world community of trading nations is going to bolster religious freedom in that country. I have yet to hear a persuasive argument that it would do so. On the other hand, we do know that imposing sanctions against China would seriously injure entrepreneurs, consumers, and impede the developing networks of civic and religious contacts on all sides. It would hinder, as well, China's technological development, injure standards of living, and quite possibly throw China into recession. I cannot understand is how deliberately setting out to harm the ability of foreign peoples to build a prosperous future for themselves contributes to compelling a foreign government to suddenly begin recognizing the equivalent of our first amendment.

Moreover, I think it is imperative that those who favor revoking MFN for China understand that free trade is not solely about economic matters of profit for corporations. It is also about freedom and strengthening the civic order in that country. From my conversations with missionaries, Christian business people, and members of the Church hierarchy, it is clear that there is a struggle taking place in China, but it is not of the Marxist variety. It is between this growing civil sector made up of churches, business associations, and local governments, over against the state sector bureaucracy still dominated by old ways of thinking.

Economic exchange, within China and with the rest of the world, is helping to strengthen this civil sector. It is creating pockets of independent wealth that allow people to separate themselves from material dependence on the state. This is especially important to churches, which have to depend, to a great extent, on the charitable sector to flourish. The dissemination of technologies like phone systems, computers, and the Internet allow dissident religious groups to be in contact with each other and with other groups around the world, and thereby draw attention to the plight of those persecuted for their beliefs.

Business can promote this by donating computers to churches, providing communications technologies to civic groups, and obtaining for dissident groups access to books they could not otherwise afford. At the Acton Institute, for example, we supply students, clerics and academics in China with materials that promote the ideas of a free and virtuous society both through the post and increasingly by means of our web site.

In this context, permit me to directly confront the issue of China's one-child per family rule. It is a gruesome policy, and as a long-time pro-life activist, I want it to be clear that I find China's population control methods to be a ghastly crime. They must end, and I would like to see the US take stronger measures to make sure that not one dime of US taxpayer dollars goes toward providing any kind of moral sanction to this policy.

But we must also realize the role that rising prosperity in China has played in reducing the numbers of forced abortions in China. I point you to Seth Faison's fascinating report from Dazu, China, that appeared in the New York Times on August 17, 1997: “In many parts of China, the one-child policy is melting away. The country's strict population control program, begun in the late 1970s and by no means gone, is becoming significantly looser in many places because-as with so much in China today-relentless economic growth is eroding the old system of control over ordinary people's lives, creating loopholes large and small. ... [T]he worst excesses of local officials seem to have diminished in recent years, and millions of Chinese who want multiple children are now having them.”

It is important to understand where the one-child per family comes from in the first place. It was an essential part of the socialist project. If a government is going to plan production, dictate lines of work, tell people where to live, they are also going to tell people how many children they must have. But with that socialist dogma finding ever fewer adherents, and free enterprise now flourishing in huge sections of the country, the population control part of the central planning regime is also starting to break down. There are two ways we can further the process. First, we must denounce in no uncertain terms the brutal methods of birth control that continue to be used in large cities. Second, and this is where the sanctioners go wrong, we must do what we can to encourage the growth of free enterprise, which allows people greater and greater control over their own destinies.

So you see, the practical and pastoral considerations can reinforce each other. Quite simply, there is no case to be made that injuring trading relationships with China's private sector will accomplish the worthy ends sought by those who are advocating denying MFN status.

There is no doubt that the American consumer benefits greatly from imports from China, and that the Chinese people greatly benefit by having a reliable market for the products of their labor and from the influence brought by US companies operating in China. But it goes beyond that. Contacts between the two countries are based on deep educational and cultural exchanges, and, quite frankly, the two governments are playing an increasingly smaller role. For the sake of prosperity and human rights in both countries, these contacts and relationships should continue.

However, these commercial relationships cannot proceed without a clearer view of China's abysmal record on human rights. And this is the other familiar part of the debate that is leading many to question what it is that the US Congress can do to promote human rights in China, ten years after the Tiananmen Square massacre. And here, I must agree with the critics of MFN status for China and disagree with many who are otherwise allies with me in trying to keep trade free and open. I can only echo the words of Pope John Paul II that every decision to invest involves a moral choice and implies certain moral obligations. If they are to profit from dealings with China, they must also reciprocate by being forces for good and for freedom in that country as well.

The same is true in our diplomatic posture. I find the Clinton administration too willing to sweep important human rights issues under the rug, and too quick to claim that calling the Chinese leaders to account would constitute a breach of protocol. That is why I call upon President Clinton, on the occasion of his upcoming visit to China, to speak out forcefully, principally and publicly about the human rights violations occurring in China when the eyes of the world are upon him, in the presence of the Chinese leadership, in Tiananmen Square.

Neither do I think it is right to in any way to hook American taxpayers into paying or subsidizing trade in China, as certain policies of the Export-Import Bank and the World Bank have done. Either free enterprise stands on its own, and takes its place within a strict juridical framework of human rights, or its merits become morally and economically dubious and even counterproductive.

We need not choose between morality and economic progress. Pressure should be brought to bear against the government in Beijing but not against the Chinese people . Revoking MFN would accomplish exactly the reverse of what we need to be focusing on. Consider the results of a Congressional Research Service study conducted when this issue came up in the 104th Congress. “It is clear,” says the study, that “the termination of China's MFN status would result in substantial increases in the cost of imports from China.” Based on a survey of individual items, the average cost of importers products would rise between 25% and 65%, but on toys substantially more. In plain terms, this would amount to a huge tax increase on the American people . Many goods would be priced out of the US, which is no small matter.

If our concern is the well-being of the Chinese people, we need to be aware that this policy would directly hit workers in China and cloud the economic future of millions of people there. That would be an irresponsible action that would do nothing to improve human rights in China. Indeed, if we are to think of economic freedom as essential to human rights, it would damage the liberty and well-being of average Chinese people.

Some of those desiring serious sanctions against all goods coming from and going to China, tend to portray that country as a giant prison camp, essentially unchanged from the days of Mao. This overlooks a crucial fact. In the last twenty years, China has set the world record for economic expansion, adding 8 to 10 percent to its GDP on an annual basis, precisely the period in which China has enjoyed MFN status with the US It is not uncommon now to see average Chinese carrying cellular phones, drinking American soft drinks, and owning their own homes.

There have been three keys to bringing about the Chinese miracle: trade, tax cuts, and privatization. From 1978 to 1995, the tax burden fell to 10.7 percent of GDP, a cut of more than 20 percentage points. This policy shifted one-fifth of all resources from government hands to the private sector, and the government sector is shrinking still further. Spending by China's government sector accounts for a lower percentage of GDP than the U.S.'s. As a result, millions have joined the ranks of the middle class. China now sports cities the size of Houston and prospects are very bright for the future of millions more. Once again, my point here is not merely about material prosperity, but about the potential and actual civil and social effect of that prosperity: It means a smaller role for government in the lives of the Chinese people, which in turn means a lessening of power on the part of the state to violate human rights.

Along with this revival in the economic sphere has come a religious revival as well. It was set in motion after officials loosened some specific laws, but they could not have known what would follow. Christian, Buddhist, and Islamic faiths are replacing the previous state religions of Marxism and Moaism. Once empty Buddhist temples now teem with worshipers, and Christianity is more vigorous today in China than at the height of the Jesuit influence in the 17th century or the Protestant evangelistic efforts in the 1920s. All three represent a challenge to the status quo. Religion has become a powerful force for further change in society. We must also remember that the rights to freedom of worship, assembly, and speech are facilitated by the natural and sacred right to own and trade property.

I am also bound to point out that the Holy Father has spoken out in very strong terms about the evils that sanctions can visit upon a country. They punish people, not governments, he has said. One Vatican diplomat recently pointed out to me that in places where there is no trade with the outside world, there are weak church organizations and civil society is virtually non-existent, and he cited North Korea, Cuba, and Vietnam as cases in point.

In sum, it is understandable that Americans do not want to see their tax dollars used to back regimes that are unfriendly to their core values. Neither should American firms doing business in China avert their eyes from violations of human rights. Rather they should serve as advocates for greater freedom. But the upshot of denying China Most Favored Nation status would be to risk scuttling the opportunity to be a force for good, to keep contact with the rising civil sector, and to improve the lot of the Chinese people.

In countries where religious minorities are treated poorly, we face a choice. We can erect a wall that shuts out our influence. Or we can keep the door open, using moral suasion, commerce, and diplomatic ties to encourage and extend the process of reform. A policy of peace and trade promotes a wider range of freedoms and actually holds out the prospect for making the right kind of difference, and provides a genuine moral center for our international political and economic relationships.